1. Generally Recognised Accounting Practice 103
DEPARTMENT OF ARTS AND CULTURE
9/12/2018
Generally Recognised Accounting Practice 103

2. PRESENTATION OUTLINE Background Entities affected by GRAP 103
DAC Support to Entities
Stakeholder Engagement
Request for Exemption
Financial Implications
GRAP 103 Impact on Audit Outcomes
GRAP 103 Challenges

3. BACKGROUND
The Accounting Standard Board has introduced the Generally Recognised Accounting Practice 103 (GRAP 103) that is applicable to Public Entities in the Arts and Culture sector.
GRAP 103 is an accounting standard that prescribes the uniform accounting for classifying and recording Heritage Assets and regulates related disclosure requirements.
Public Entities reporting to the Department of Arts and Culture must comply with the requirements set out in the standard.

4. ENTITIES AFFECTED BY GRAP 103
MUSEUMS
OTHER
LIBRARIES
National English Literary Museum
South African Heritage Resources Agency
National Library of South African
William Humphreys Art Gallery
Freedom Park
Die Afrikaanse Taalmuseum
Performing Arts Centre of the Free State
Iziko Museums
War Museum
Voortrekker Museum
Nelson Mandela Museum
KwaZulu Natal Museum
Ditsong Museums
Robben Island Museum
Luthuli Museum
National Museum Bloemfontein

5. DAC SUPPORT TO ENTITIES
The Department of Arts and Culture has issued a directive to its entities to ensure compliance with GRAP 103.
Public entities were requested to compile the progress reports for DAC’s consideration pertaining to the implementation of GRAP 103.
The Department also requested the National Treasury to provide technical and financial assistance to entities affected by GRAP 103.
GRAP 103 is a standing Agenda item in the DAC Chief Financial Officer’s Forum where financial matters including compliance issues are discussed.
Some entities have deferred their programmes/projects so that the funds can be redirected for the implementation of GRAP 103.
These entities appointed heritage experts and audit firms to assist with GRAP 103 implementation
The Policies developed by these entities were shared with entities that are unable to procure the services of heritage experts due to financial constraints.

6. STAKEHOLDER ENGAGEMENT
The stakeholders engaged by the Task Team through the DAC are as follows:
National Treasury,
Office of the Accountant General,
Auditor-General, and
Accounting Standard Board.
After deliberating on the challenges presented by GRAP 103 to entities, the above parties resolved that the Department must submit an application to the National Treasury requesting for an exemption.
The above mentioned application was supported and approved by the Minister of Arts and Culture on 19 June 2015.

7. REQUESTS TO NATIONAL TREASURY
The Department has applied to National Treasury for exemption from complying with GRAP 103 on behalf of its entities.
The Department requested the National Treasury to extend the transitional period to 31 March 2018.
As part of the DAC submission to the National Treasury, the Department requested that the Auditor-General defer the expression of audit opinion on compliance with GRAP 103.
The request for deferral of opinion was informed by a need to allow entities to phase in GRAP 103 using their limited financial resources due to budgetary constraints.
Approval for the exemption was granted by the Minister of Finance
Unfortunately this was recognized by the AGSA base on the notion of fair presentation

8. FINANCIAL IMPLICATIONS
Entities did not have funding to conduct valuation of heritage assets.
Entities were requested to obtain estimated costs from reputable companies to conduct valuations.
E.g.: Based on the quotation obtained by Iziko Museums of South Africa, the cost for valuation range from R3 million to R13 million depending on the number of Heritage Assets.
During the augmentation window period, the Department has submitted a bid (to National Treasury) for additional funding to the tune of R205 million on behalf of public entities for the purposes of rolling out GRAP 103.
Entities indicated that additional Human Resources and equipment are required to conduct physical verification of the Heritage Assets at their disposal.
The heritage assets in terms of quantities range from 7 objects to 2 million objects.
National Treasury have approved an allocation of R200 million for GRAP 103 implications in the year 2017/18.

9. IMPACT OF GRAP 103 ON AUDIT OUTCOMES
It must be noted that most of the entities received qualified audit opinion in the 2014/15, 2015/16 and 2016/17 related to compliance with GRAP 103.
The GRAP 103 funding have been transferred to all entities, and thus, the entities audit outcomes are expected to improve.

10. DAC INTERVENTION AND PROGESS
GRAP 103
CHALLENGE
CONTRIBUTING FACTORS
DAC INTERVENTION AND PROGESS
The GRAP 103 standard was approved without due consideration of the cost implications.
Funding was not made available to implement GRAP 103 in the 2014/15, 2015/16 and 2016/17 financial years.
National Treasury was consulted and an amount of R200 million has been allocated to implement the standard
The aforementioned funds are only available in the 2017/18 financial year
The heritage assets should be valuated by professionals/experts valuators in the heritage sector
There are limited professionals with the required skills
Moreover, the R200 million allocation is once off. No funds have been made to sustain the implementation of the standard.
Safeguarding of high value heritage
The knowledge of high valued heritage assets will create a risk of theft by local and international syndicates
National Treasury to be approached to fund safe-keeping and insurance of high value assets

11. DAC INTERVENTION AND PROGESS
GRAP 103
DESCRIPTION
CONTRIBUTING FACTORS
DAC INTERVENTION AND PROGESS
Entities were required to develop heritage assets policies in line with the standard
There was no benchmarks that would serve as guideline
Entities were advised to consult with Auditing Firms/Heritage Experts to check if they can be able to offer the required services
The large museums will face challenges because the valuation of assets will take longer that one financial year
The quantities of heritage assets in some entities are very large and different buildings and locations
The re-valuation of assets should be done after three to five years
Heritage assets do not depreciate as such the valuation exercise should be done after reasonable period
National Treasury to be approached to fund safe-keeping and insurance of high value assets

12. DEPARTMENT OF ARTS AND CULTURE
9/12/2018
THANK YOU